• EUR/USD rebounds toward 1.1800 as US Dollar momentum fades.
• Trump’s tariff move revives trade tensions, weighing on the Greenback.
• Eurozone inflation eases, reinforcing expectations of steady ECB monetary policy.

EUR/USD regains traction on Wednesday as the US Dollar’s (USD) upside momentum fades, allowing the Euro (EUR) to trim its earlier intraday losses. At the time of writing, EUR/USD is trading around 1.1805, rebounding from the daily low near 1.1771.

The Greenback is struggling to extend its advance as persistent structural headwinds stemming from US President Donald Trump’s unpredictable trade rhetoric continue to weigh on investor sentiment and raise doubts about US policy credibility and fiscal stability.

Trade tensions reignited after President Trump announced a 10% global tariff just hours after the US Supreme Court ruled against his use of the International Emergency Economic Powers Act (IEEPA) last week.

The new tariff took effect on Tuesday under Section 122 of the Trade Act of 1974, with the White House indicating that a formal order is being prepared to raise the rate to 15%.

In response, the European Parliament paused the ratification process for the US-EU trade deal agreed last year. The chair of the European Parliament’s trade committee, Bernd Lange, said on Monday, “We want to have clarity from the US that they are respecting the deal because that’s a crucial element.”

Elsewhere, reduced expectations for imminent Federal Reserve (Fed) interest rate cuts are offering some support, helping to prevent deeper losses in the US Dollar. Markets are reassessing the easing path as policymakers reiterate that inflation remains elevated and needs to convincingly return toward the central bank's 2% target.

In the Eurozone, softer inflation data released earlier in the day briefly weighed on the Euro. The Harmonized Index of Consumer Prices (HICP) rose 1.7% YoY in January, down from 2.0% in December, marking a 16-month low, according to final estimates. Meanwhile, core inflation eased to 2.2% YoY from 2.3%.

The data reinforced the view that inflation is under control, strengthening expectations that the European Central Bank (ECB) will maintain a steady policy stance. Traders continue to price in interest rates remaining unchanged throughout 2026.

Looking ahead, attention turns to fresh sentiment data from the Eurozone, with the February Consumer Confidence and Economic Sentiment Indicator readings due on Thursday. Investors will also monitor US Producer Price Index (PPI) figures on Friday.

(This story was corrected on February 25 at 16:55 GMT to say that EUR/USD rebounded from a daily low near 1.1771, not 1.1711.)